This article By Ali Shana was originally published on Microdose Psychedelic Insights and appears here with permission.
Thanks to academic collaboration, legislative change, and biotech-focused drug development, the emerging psychedelic industry is stronger than ever before. However, there is a hidden hero in the details of the numerous press releases pertaining to psychedelic medicine progress – the investment banks allowing this space to grow. Indeed, the sheer scale of psychedelic medicine’s agenda requires a lot of funding, and much of this funding is thanks to investment banks who enter agreements with psychedelic medicine companies. Though there is an obvious mutually beneficial opportunity for both sides of psychedelic investment, the banks are still taking on a relative area of risk. But by doing so, they are simultaneously making it less risky, more financially stable, and of course, more lucrative for investors.
A Brief Explanation of Investment Banks in Psychedelia
Though many are hip to investment terminology, psychedelics bring in individuals from all walks of life. Furthermore, psychedelic enthusiasts may find themselves interested in investing for the first time thanks to the psychedelic medicine renaissance. It is therefore paramount to understand and identify the investment banks providing psychedelic investment opportunities.
An investment bank, such as Canaccord Genuity Group, is simply a bank which purchases holdings of “newly issued shares” and resells them to investors. In other words, the investment bank buys large amounts of stock from companies they believe will sell well to investors. The company benefits from the “underwriting” services provided by the investment bank – selling securities, bonds, stocks, finding investors, etc. In turn, the investment bank benefits from the fee they charge for their underwriting services, and this fee can vary from deal to deal.
Public or private, you have to raise money as a company to stand on your own feet. Especially for new emerging companies in a nascent industry, investment banks are useful in raising investment capital. The following four banks have been instrumental to the increase in psychedelic investment: Canaccord Genuity Group, Eight Capital, Gravitas Securities Inc., and Mackie Research Capital Corporation.
Canaccord Genuity Group
Readers will likely recall Canaccord Genuity Group was the investment bank behind recent financing agreements for MindMed, Numinus, and Tryp Therapeutics. Canaccord is based out of Vancouver, Canada, which perhaps explains their inclination towards Canadian psychedelic investment opportunities.
Their deals with MindMed and Numinus have also involved Eight Capital (more info on these agreements below). However, they served as the lead underwriter for frequently upsized deals with MindMed. They also included Compass Pathways in their bullish report back in October,…